The struggle to find new ways to cover against adverse weather events has spread to Australia, where Macquarie Bank has announced a joint venture with the US-based Aquila group to offer weather derivatives transactions in the Australian market.

The alliance is intended to supply back-up for Australian businesses facing the adverse affects of abnormal weather on their revenue and business operations.  Industries such as energy, agriculture, construction, tourism and leisure are their major targets.

Weather derivatives hedge payouts based on the difference between a negotiated “strike price” and weather reports from the Bureau of Meteorology – a different approach from insurance, and one which Macquarie says will “become an important part of every risk management portfolio in weather-sensitive industries”.